CB Bhattacharya Writes for Forbes on “Corporate Social Responsibility: It’s All About Marketing”
Forbes has published the following article on corporate social responsibility, written by Boston University School of Management’s CB Bhattacharya, professor of marketing and Everett W. Lord Distinguished Faculty Scholar. Bhattacharya is also currently E.ON Chair in Corporate Responsibility at the European School of Management and Technology in Berlin.
Corporate Social Responsibility: It’s All About Marketing
Corporate responsibility policies have been gaining increasing attention from senior executives as questions of sustainability and green agendas have come to permeate business the world over.
The financial crisis has only heightened this trend by forcing companies to clearly identify themselves as responsible and trustable. Yet executives commonly don’t understand the most effective ways to design and implement sustainability programs. Because of that they can’t fully capitalize on the potential corporate responsibility has for creating business value, and they are achieving little with it despite all their interest.
So far businesses have mostly focused on direct routes to getting business value from corporate responsibility. They have pursued easy-win strategies or activities with direct commercial benefits, such as measuring and reducing their corporate carbon footprints. Such activities undoubtedly bring some value to businesses and society, but they fall far short of the mark.
What we are slowly starting to see is a second wave of corporate responsibility behavior marked by a clearer focus on the total business value such policies can bring. To fully benefit from corporate responsibility, businesses must wake up to the fact that they need to take a more indirect route to creating value with it. They must start by seeing where and how key stakeholders react to a firm’s corporate responsibility initiatives.
In practical terms, this involves moving away from a top-down strategy determined by the board to a richer process of bottom-up co-creation with stakeholders. It means using focus groups and other marketing research techniques to understand the deeper psychological needs that corporate responsibility can answer for stakeholders, such as the self-esteem and pride that a consumer can draw from affiliating with a socially responsible company. With such knowledge companies can elicit and gauge the demands of their target audiences. They stand to learn a lot.
For example, recent research involving Procter & Gamble, General Mills, and Timberland revealed that many of their stakeholders had no idea of the companies’ corporate responsibility initiatives, or had a very limited understanding and didn’t find them personally relevant. Because of that, they often questioned the companies’ motivations for engaging in corporate responsibility activities.
Now those companies have been able to build stronger connections with their stakeholders by improving their communication to build active participation and engagement in their initiatives. Their shift to a stakeholder-centric approach has brought them observable improvements in corporate responsibility return, such as increased customer and employee loyalty.
Finding your corporate responsibility strategy by catering to stakeholders might sound cynical if you’re a purist who thinks only of some larger social good, but adopting that kind of more sophisticated strategy actually benefits all. The reality is that the external stakeholders you engage with will often prove to be your toughest critics, and they will insist on much richer and ambitious corporate responsibility programs of genuine social benefit.
Indeed, part of the challenge is to judge which of the ideas put forward by stakeholders are realizable, commercially viable, and valuable. At the same time, those external stakeholders give you an invaluable source of feedback about what actions can make customers and clients connect more favorably with a given brand. That in turn improves your company’s image and thus increases the business value of committing to corporate responsibility.
In moving to such a model, businesses must make internal changes to support the execution and evaluation of their initiatives. Companies are commonly criticized for not involving their boards enough in corporate responsibility. That is a fallacy. To the contrary, they are most often too top-down, generating ideas in the boardroom and passing them on to a sustainability or corporate responsibility department that often doesn’t act in concert with the strategy or marketing department. To effectively capitalize on the indirect route to corporate responsibility value, programs need to operate through more traditional and developed business functions.
In particular, they should involve the marketing team. Marketing always has the knowhow to conduct meaningful campaigns and measure return on investment. Moreover, involving marketing in consumer research and analysis enables that department to coordinate how a corporate responsibility program is presented to those it wishes to influence.
That creates a virtuous circle, giving marketing a useful tool, beyond its traditional mix of price and product, for differentiating the company and its products from the competition. Many businesses champion their credentials in the area of corporate responsibility, but few capitalize on effective implementation and measurement of it to strengthen their brand identities. As corporate responsibility becomes a bigger shaper of companies’ public images, ignoring the advantages of effective corporate responsibility marketing becomes an increasingly higher stakes gamble.
With the costs of ignoring corporate responsibility–or, worse, getting it wrong–steadily increasing, businesses need to find sophisticated ways to link social and business value at the individual, stakeholder level. Too often corporate responsibility is looked at and discussed broadly, relying on sweeping aggregate-level research and analysis to gauge its effectiveness and method of execution. Consultancies and business educators have been guilty of promoting that approach. Now is the time for business leaders and those who seek to influence them to step up and put aside macro-focused thinking for the deeper, more thoughtful insight they need. Now is the time for companies to realign both internally and with their outside audiences to unite social good with hard-nosed commercial value.
C. B. Bhattacharya is the E.ON chair in corporate responsibility at the European School of Management and Technology in Berlin. He is on leave from Boston University, where he is the Everett W. Lord Distinguished Scholar and professor of marketing at the School of Management.
From the article “Corporate Social Responsibility: It’s All About Marketing,” by CB Bhattacharya, Forbes, November 20, 2009.